Today, on 23 July 2025, the Capital Markets Board published an important amendment to the Regulation on the Principles of Stock Exchange Activities of Borsa İstanbul A.Ş. in the Official Gazette (No. 32964). This comprehensive update introduces a robust regulatory framework for the creation, calculation, governance, and supervision of financial benchmarks (finansal ölçütler), especially in cases involving external data sources. The amendments align with IOSCO principles and reflect a global trend toward enhancing transparency and reducing conflicts of interest in financial index administration.
Key Definitions and Concepts Introduced
The regulation now formally defines critical terms such as:
- Financial benchmark (finansal ölçüt): A regularly calculated index, rate, or similar indicator used in pricing financial instruments, monitoring returns, or determining payments.
- Financial benchmark administrator (Borsa): Borsa İstanbul now bears full responsibility for managing benchmark-related processes.
- External data (borsa dışı veri): Data used in benchmark calculations that originates outside Borsa İstanbul.
- Benchmark user and licensed user: Entities using or licensed to use benchmarks for financial products.
New Responsibilities for Borsa İstanbul
As the financial benchmark administrator, Borsa İstanbul must now:
- Develop and publish rulebooks for the creation, calculation, and distribution of benchmarks.
- Ensure transparency, reliability, and consistency of benchmarks.
- Establish internal governance structures, including oversight and control systems.
- Maintain records for a minimum of five years.
Borsa is also responsible for monitoring data sufficiency, implementing changes to rulebooks where needed, and managing emergency measures during market disruptions or data gaps.
Outsourcing and Data Sourcing
The amended regulation allows Borsa to source external data under strict conditions. Borsa must:
- Publicly disclose its data providers.
- Draft and monitor compliance with written agreements covering roles, responsibilities, and standards for data providers.
- Implement contingency plans to mitigate operational risks from third-party providers.
Conflict of Interest and Governance Mechanisms
The regulation introduces stringent rules to detect, prevent, manage, and disclose conflicts of interest. These include:
- Organisational separation of duties and accountability.
- Confidentiality measures for sensitive data.
- Restrictions on compensation structures tied to benchmark levels.
- Periodic audits and external review mechanisms, especially in cases of identified or potential conflicts.
Where Borsa's ownership structure or affiliated companies give rise to a conflict of interest, it must establish an independent supervisory framework with balanced representation.
Benchmark Control and Surveillance
A robust control system is now mandatory, including:
- Verification of data input integrity and benchmark output accuracy.
- Whistleblowing and early-warning mechanisms.
- Staff qualification reviews and mandatory training in ethics and operational continuity.
Supervision procedures include periodic reassessment of benchmark definitions, evaluation of internal/external audit results, and handling complaints or alerts from users or stakeholders.
Benchmark Creation and Cessation Rules
When designing benchmarks, Borsa must aim to reflect economic reality, minimise distortion, and ensure representative market data. Specific provisions regulate:
- Sample sizes and market depth.
- Transparency in interest-rate-based benchmark adjustments.
- Benchmark sensitivity analysis (e.g., for interest rate swaps).
- Conditions and procedures for discontinuing benchmarks.
Borsa may terminate a benchmark where underlying conditions no longer support accurate representation or data becomes insufficient.
Audit Requirements
The regulation mandates that benchmark processes undergo their first audit within six months of the amendment's effective date and at least every two years thereafter. Audits must be conducted by independent internal or external auditors with relevant expertise, based on the scale and complexity of the benchmark activity.
These regulatory changes underscore Turkey's commitment to international standards in financial markets. The introduction of clearly defined responsibilities, transparency rules, conflict management protocols, and oversight structures significantly strengthens the governance of benchmark administration under Borsa İstanbul's remit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
